Free CISI Risk in Financial Services mock exam
Sit the whole Risk in Financial Services paper: 100 questions across all ten risk elements, under a 120-minute clock. Free, no sign-up, with a weighted score, an element breakdown and a written explanation for every answer.
What is on the CISI Risk in Financial Services mock exam?
One full Risk in Financial Services practice paper: 100 questions in 120 minutes, weighted across the ten syllabus elements exactly as the real paper is. Score 70 out of 100 to meet the 70% practice threshold, then review every answer one at a time.
- Questions
- 100 original practice questions
- Time
- 120 minutes
- Practice threshold
- 70%, which is 70 of 100
- Access
- Free, with no account or card
How the paper is weighted
Risk in Financial Services is a standalone Level 3 Award; add a CISI regulatory exam and it becomes the Level 3 Certificate. Ten elements share 100 questions, and the four risk-type elements in the middle of the syllabus dominate.
| Element | Questions |
|---|---|
| 1. Principles of Risk Management | 14 |
| 2. International Risk Regulation | 7 |
| 3. Operational Risk | 15 |
| 4. Credit Risk | 15 |
| 5. Market Risk | 15 |
| 6. Investment Risk | 11 |
| 7. Liquidity Risk | 10 |
| 8. Model Risk | 3 |
| 9. Risk Oversight and Corporate Governance | 5 |
| 10. Enterprise Risk Management (ERM) | 5 |
| Total | 100 |
Operational, Credit and Market Risk are fifteen marks each and Principles of Risk Management is fourteen, so those four elements decide 59 of the 100 marks. Model Risk is three, Risk Oversight and Corporate Governance is five and Enterprise Risk Management is five. The paper is broad, but it is not flat.
For the cleanest rehearsal, set aside the full 120 minutes, avoid notes and answer every question. There is no negative marking on the real paper, so a guess is always better than a blank. The mock hides feedback until submission and warns you before handing in a paper with blanks.
Full practice paper
100 questions. 120 minutes. No sign-up.
Sit the paper in one go if you can. Answers and explanations stay hidden until you submit, so the score is a more useful rehearsal than an instant-feedback quiz.
The timer starts when you press the button. Reloading or leaving the page ends this sitting.
Sample Risk in Financial Services questions, with answers
8 questions at the standard of the paper above, weighted towards the elements that carry the most marks. Pick an answer to see whether you were right and why. None of these appear in the timed mock, so working through them first costs you nothing when you sit it.
How can a firm best protect its customers from service interruption if a third-party supplier, such as an IT provider, defaults or delays delivery?
Not quite. The answer is C.
Arranging alternative sourcing keeps equivalent goods and services available if a third-party supplier defaults or delays delivery, so service to customers continues uninterrupted. Supplier relationship insurance might compensate the firm financially but does nothing to keep the service running. A capital requirement is not something one firm can impose on its supplier, and supplier collateral is a credit risk mitigant that likewise fails to maintain continuity of service.
To prevent abuses and address conflicts of interest, the Core Principles require banks to enter into transactions with related parties on what basis?
Not quite. The answer is A.
The principle on transactions with related parties requires banks to enter into any such transactions on an arm's length basis, to monitor them, to take steps to control or mitigate the risks, and to write off related-party exposures under standard policies. A preferential basis is exactly the abuse the principle is designed to prevent, since related parties should receive no better terms than independent counterparties. Consolidation describes how a banking group is supervised rather than how individual transactions are priced, and collateral is not the stipulated requirement.
At a firm where staff share system passwords with each other, the causal category used to identify the operational risk is:
Not quite. The answer is D.
Passwords shared by staff is listed as a systems risk, in the same group as systems being unavailable during peak hours and data becoming subtly corrupted. People risk is the obvious trap, since staff are the ones sharing the passwords, but the categorisation places system access and credentials with the systems that grant them. No written procedure defines the sharing, so it is not a process risk, and everyone involved is inside the firm, so no external event arises.
Which of the following is defined by ISDA as occurring when exposure to a counterparty is adversely correlated with that counterparty's own credit quality?
Not quite. The answer is C.
That is ISDA's definition of wrong way risk: exposure to a counterparty worsens exactly as that counterparty's own creditworthiness deteriorates. Concentration risk is an uneven spread of exposures across counterparties or sectors, settlement risk is the failure of a simultaneous exchange of cash and securities, and systemic risk is a breakdown running across the financial system; none of the three turns on that correlation.
Which of the following is NOT an advantage of the parametric (analytical) approach to VaR:
Not quite. The answer is C.
The parametric approach assumes returns are normally distributed, and an option's asymmetric payoff breaks that assumption, so it cannot be applied to an option book at all; Monte Carlo simulation is used instead. The other three are genuine advantages: it is the simplest of the three methodologies, it needs only a limited amount of input data and little computation time, and because the VaR figure is derived straight from the standard deviation of returns no simulations have to be run.
Roughly two-thirds of an investment's annual returns would be expected to fall within:
Not quite. The answer is B.
About two-thirds of outcomes lie within one standard deviation either side of the average return, which is why standard deviation is used as the standard measure of an investment's volatility. Two and three standard deviations capture progressively wider ranges and therefore a much larger share of outcomes than two-thirds, while half a standard deviation captures considerably less.
Under a netting agreement a bank owes a counterparty $60 million and is owed $150 million by it. The counterparty defaults and unsecured creditors recover 40 cents in the dollar. The bank's net cash result is:
Not quite. The answer is B.
Netting reduces the two positions to a single claim of $90 million, and 40 cents in the dollar on that claim produces an inflow of $36 million. Applying the recovery rate to the gross $150 million without deducting what the bank owes gives $60 million, $90 million ignores the recovery rate altogether, and $150 million assumes payment in full.
Of the following risk responsibilities, the one that is NOT delegated to the chief risk officer is:
Not quite. The answer is B.
The firm's overall risk appetite is approved by the board itself, because every other limit in the firm flows down from it. Within that envelope the chief risk officer sets limits for individual businesses, may approve exposures above those limits up to the board's ceiling, and oversees the monitoring of how much of each limit is being used.
Where the marks go on this paper
Operational Risk is the element most candidates think they already understand. Fifteen marks turn on Basel event categories, key risk indicators, loss data, business continuity and the difference between an operational risk and an operational failure, and general familiarity is not the same as the taxonomy the exam tests.
Credit Risk and Market Risk are fifteen marks each and reward precision with the measures. Probability of default, exposure at default, loss given default, credit mitigation, value at risk and its limitations, stress testing and back testing: each has a definition the paper will test against three near-misses.
Liquidity Risk is ten marks and consistently under-revised because it sits late in the workbook. Funding liquidity against market liquidity, the liquidity coverage ratio and the net stable funding ratio are a small, learnable body of material worth a tenth of the paper.
Model Risk is three marks and Enterprise Risk Management is five, which tempts candidates to skip both. Together they are 8% of the paper, and both are short enough to learn properly in an evening.
How to use your result
Treat 70% as a practice threshold, not a readiness promise. A stronger signal is a run of timed scores above the threshold with no element repeatedly falling behind. The four big elements are 59 marks, so your score on them roughly sets your result. Check them first, then look at whether the small elements at the end of the syllabus scored badly because you did not know the material or because you never read it.
Use the answer review to understand each miss, then revisit the relevant part of the Risk in Financial Services exam guide. To drill a single topic rather than sit a whole paper, start with the free Risk in Financial Services practice questions.
Looking for official material? Risk in Financial Services past papers: what actually exists explains what CISI actually publishes and how to combine it with question practice. For more full papers, see the paid plans, from £59.
Independent practice material: PasskeyPrep is not affiliated with, endorsed by or accredited by the Chartered Institute for Securities & Investment. These questions were written independently against the syllabus. They are not copied from a live CISI exam or official past paper.
Frequently asked questions
Is this Risk in Financial Services mock exam really free?
Yes. All 100 questions are free to sit, with no account or card needed. Submit and you get a weighted score, a ten-element breakdown and a written explanation for every answer.
Does this mock match the real Risk exam format?
It uses 100 questions, a 120-minute timer, a 70% practice threshold and the published weightings across the ten syllabus elements. The questions are original PasskeyPrep practice material, not the CISI examination platform or official exam questions.
Is Risk in Financial Services an Award or a Certificate?
On its own the exam earns the standalone Level 3 Award. Add a CISI regulatory exam and you complete the Level 3 Certificate in Risk in Financial Services.
Which element should I revise most?
Operational, Credit and Market Risk are fifteen marks each and Principles of Risk Management is fourteen. Give those four the most time, but do not write off Model Risk and Enterprise Risk Management, which are 8% of the paper between them.